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Your Basement Can Become A Terrific Living Area

One of the least costly home renovation projects involves fixing up a room you may already have in your home that is not currently being used. Attic space and the garage are two areas which can be converted into habitable space as can a basement. Taking away attic space means getting rid of an important area of storage while converting a garage into living space means your cars will have to stay outside.

A basement, if you have one, can be the best choice for a new living area as many homes already come with a partially finished living area below ground. Habitable during Spring and Fall, basements need a cooling mechanism when outside temperatures soar and a heating capability when they dip. For as little as a few thousand dollars, you can convert that unused space into a recreation room, play room, or family room adding needed room and value to your home.

Two Matters To Keep In Mind Before Converting Your Basement

Before you convert your basement there are two things to keep in mind: is your basement dry and is the ceiling at least seven feet high? If you regularly have water problems with your basement, then you may find converting this area into living space much more costly then you had expected. Drains, water diversion systems and outside grading can keep water from entering your basement while having a dehumidifier handy will help remove dampness. Waterproofing the walls can go a long way toward keeping water out.

If your ceiling area is low, anyone over six feet tall may have trouble using your basement. Pipes, electrical conduits and heating ducts can be hidden behind a false ceiling, but if that ceiling is too low, then using your basement as a living area becomes less appealing. In order to free up limited head space, a qualified HVAC contractor could reroute the equipment.

Local Building Codes Can Be A Factor

In some locales, home building codes forbid the finishing of any basement that doesn’t meet certain building code criteria (e.g., ceiling heights, number of exits). Always make sure that your home improvement project gets the necessary approvals before progressing. Being forced to rip out a job that violates local building codes is a costly and frustrating endeavor.

Using The Existing Heating And Cooling System

If your home’s current HVAC system is large enough, a home improvement contractor may be able to extend the current heating and cooling system to cover the basement. This is a much less costly house remodeling project then having a separate HVAC system installed.

If your home doesn’t already have central air conditioning, then cooling the basement will require a separate system or an upgrade of your home’s current HVAC unit. Then again if you live in an area where heat waves are not a regular occurrence, you may find installing a separate system not cost effective. A good alternative would be to consider purchasing a portable air conditioner, one with enough BTUs to cool the entire living area.

Enjoyment And Value

Finally, when considering any home improvement project ask yourself two questions: Will it bring enjoyment to you? Does it add to your home’s value? You certainly want the benefit of an enjoyable living area, but having that area add value to your home in the event you should one day sell it is worth keeping in mind.

If you are shopping for a home mortgage loan, then weighing the different choices available to you can save you thousands of dollars over the course of the loan. These choices generally include the loan type, length of the loan, your down payment, interest rate charged, fees, and lender selected. Of course, you don’t want to make a snap decision with your home purchase loan options as a lot of money could be riding on the line. Please read on for some tips on how you can save money on your next mortgage loan.

Get Informed

A little bit of research on your part can save you plenty of money on your next mortgage loan. If you plan on living in your home for the long term, then comparing the home purchase loans options available to you is essential to helping you save money.

Assuming that you qualify for and can afford home financing, you will find that the number of mortgage choices available to you are almost limitless. Your loan term can be for 15, 30, 40 even 50 years with some lenders offering 20 and 25 year term mortgages too.

Annual Percentage Rates are generally not that different from each other, although a savings of even just one quarter of one percent can result in a significant savings over the life of the loan.

Six Loan Types

The loan types, ultimately, can yield some of the biggest savings and generally fall under the following categories:

Fixed Rate Loans — The most popular mortgage lending option, a fixed rate loan means that your mortgage payment stays the same for the life of the loan. The amount you pay today will never change, but you will pay a slightly higher interest rate than the homeowner with a variable rate mortgage. Explore other options if you only plan on living in your home for the short term.

Adjustable or Variable Rate Loans — A lower rate and the ability to borrow more money are two of the chief reasons for homeowners to seek a loan with a variable interest rate. If you are planning to stay in your home for three years or less, than an adjustable rate mortgage is the best choice for you. On the other hand, long term homeowners may find that the constantly changing loan payments to be a source of uncertainty and discomfort.

Hybrid Loans — If you want the security of a fixed payment along with the lower cost of a variable rate loan, then a hybrid loan could be the best choice for you. With a hybrid loan, your interest rate stays fixed for a set number of years then adjusts yearly thereafter. Loans with a 5/1, 7/1 or 10/1 option means that they are fixed for the first 5, 7, or 10 years respectively and then adjust annually thereafter.

Interest Only Loans — Consumers seeking low monthly mortgage payments can turn to interest only loans to save money. With an interest only loan, your monthly payments reduce the amount of interest owed on the loan, but not the principle initially. For example, for the first five or seven years of the loan, the principle stays the same meaning that your $350,000 principle remains the same until the interest only time-frame has ended. The flip side of interest only loans is that you could lose money if your home’s value declines.

Minimum Payment Loans — The lowest monthly payment home mortgage loans are Minimum Payment Loans. Basically, you’ll make lower monthly payments for a certain length of time and afterwards pay a higher rate. Where housing prices are high, these types of loans have made homeownership a dream come true for consumers who might otherwise not be able to afford a home.

Zero Down Mortgages — In some cases, consumers can purchase a home with no money down. Typically government sponsored loans, zero down mortgages can be ideal for the consumer who cannot raise the capital to cover closing costs and the down payment. Variations of the zero down mortgage are those loans requiring 3 to up 20% down.

Get Empowered

Not every consumer is eligible for each loan type mentioned; restrictions apply and fees vary. Clearly, fully understanding the terms of your loan is important toward recognizing the advantages and disadvantages of your mortgage choice. An informed consumer is an empowered homeowner which is what you want to be when weighing your mortgage choices.

You found the home you want and now comes the third step in the home buying process: negotiating the price you will pay for the home. Certainly, meeting the buyer’s asking price can take the edge off of the buying process but other factors will weigh in including market conditions. How you tackle this part of the home buying process could cost or save you thousands of dollars.

What Type Of Market Are You In?

What is going on in your local market? Is it a buyer’s market or a seller’s market? If you are in a buyer’s market you can offer less for the home than the seller’s price, but if you are in a seller’s market you may have to pay above the asking price especially if other parties are competing with you.

What’s In The Contract?

Your agent will provide you with a copy of the terms of the contract prior to you making your offer. You’ll want to acquaint yourself with all of the details to learn exactly what you are getting when purchasing the home.

Purchase price, terms of the sale, earnest monies required, financing contingencies, settlement and possession, a selling of your home contingency, home inspection, and termite inspection and environmental testings should all be noted. Your attorney will work on your behalf to make certain that your interests are protected.

Before Extending Your Offer

What are you getting with the home that you are buying? It should include all of the fixtures and just about everything that is nailed or bolted down. However, the refrigerator, washer/dryer, shed, outdoor furniture, window treatments and other items may be excluded, and could be pawns used in negotiating the final price.

Presenting Your Offer

Once you are satisfied that all of the previous steps have been accomplished, you can then present an offer based on the information on hand. You will present your offer to your real estate agent who will contact the seller’s agent. The seller’s agent will then contact the homeowner and present your offer to them.

The homeowner can respond to your offer in several different ways including:

• Accept your offer as is.
• Reject your offer outright.
• The seller could change the terms of the contract and present a counter-offer.
• You can then counter the counter-offer.
• The seller can entertain a second offer.

Once an agreeable purchase price has been reached then you are on your way to home ownership. Of course, one or more contingencies could kick in otherwise the acceptance of the contract makes it a legally binding document for both parties.

Negotiating a home purchase can be accomplished quickly provided that all of the contract conditions are worked out. Skilled real estate agents working closely with the buyer and seller can smooth out any rough patches and bring the negotiations to a successful and orderly conclusion.